How big can Andreessen Horowitz really get?

With a $15 million check from none other than Andy Rachleff—partner of the storied firm now seen as one of a16z’s largest rivals, Benchmark—Loudcloud began hiring like mad, bringing on 200 employees in only 12 months’ time. 

The team outgrew a warehouse in Sunnyvale, Calif., and moved into a three-story stucco building they referred to as the “Taj,” in reference to the Taj Mahal. “People were sitting in the hallways. We rented a third parking lot down the street and ran shuttle vans to the office. The neighbors hated us. The kitchen was stocked like Costco,” Horowitz would recall in his first book, The Hard Thing About Hard Things.

Perhaps ironically, Andreessen and Horowitz’s eponymous venture capital firm, a16z, is running into its very own challenges as a result of its growth spurt—just as Loudcloud and dozens of its own portfolio companies have. General partners at Andreessen Horowitz may not be sitting in the hallways—but they’re no longer all sitting in the same room for their investment meetings; they sprawl out around the country, far outside the border of San Francisco or Silicon Valley. 

There are tensions and inherent challenges that come along with scale for VC firms. Larger funds and bigger bets may hinder the outperforming returns that have attracted limited partners. Star partners may leave in favor of building their own brand rather than being another cog in the wheel.

Now with more than 500 staffers, how big can Andreessen Horowitz really get without costing them the very success they’ve seen so far? It’s a question that venture capital and startup reporter Eric Newcomer and I explore in a piece we co-wrote about Andreessen Horowitz. The two of us spoke to more than two dozen a16z insiders, limited partners, and portfolio companies, as well as former partners and VC rivals, to get a clearer picture of the venture industry’s ambitious moonshot and how it could end up panning out.

As a16z dips its toes into wealth management, public market investing, and public policy, it’s also diving headfirst into drama. Marc Andreessen, a Facebook board member, recently invested the firm’s money in two ostracized technology executives’ new companies. He’s grown contemptuous of the media. He thrust the firm into Elon Musk’s chaotic $44 billion Twitter takeover with a nearly $400 million investment, underscoring a founder-first mindset toward investing that might not fly outside the venture world.

Andressen Horowitz has been reticent about sharing its plans, and its partners declined to discuss them on the record with us, but you can read what Eric and I found out ourselves here.

It’s that time of year…Where Term Sheet readers weigh in on what the future will hold. Each year, we ask readers—from venture capitalists to private equity investors to investment bankers to startup founders to professors—to gaze into their crystal ball and tell us how the year ahead will shape up for dealmaking and the private markets. That’s right—it’s the Crystal Ball edition. In our 2022 edition, readers made predictions on everything from NFTs to health care and farming. Some of those predictions played out (i.e. regions outside of Silicon Valley will continue to grow, or more downrounds from VC-backed startups). Others…not so much (i.e. Jamie Dimon will turn around and publicly support Bitcoin). What will 2023 bring—a respite from the layoffs? A further plunge for tech stocks? An appetite for IPOs? An update on taxation for carried interest? Please send your predictions to both jessica.mathews@fortune.com and anne.sraders@fortune.com 

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- CatalYm, a Munich, Germany-based immunotherapy biotechnology company, raised $49 million in Series C funding. Brandon Capital and Jeito Capital co-led the round and were joined by investors including Forbion, Novartis Venture Fund, Vesalius Biocapital III, Bayern Kapital, BioGeneration Ventures, and Coparion.

- Strand Therapeutics, a Boston-based programmable mRNA company, raised an additional $45 million in Series A funding. FPV led the round and was joined by investors including Eli Lilly and Company, Potentum Partners, Playground Global, and others. 

- Celebal Technologies, a Jaipur, India-based software consulting and delivery organization company, raised $32 million in funding from Norwest Venture Partners. 

- Fizz, a San Francisco-based social media platform for college students, raised $12 million in Series A funding. NEA led the round and was joined by investors including Lightspeed Venture Partners, Rocketship VC, Owl Ventures, Smash Ventures, and New Horizon.

PRIVATE EQUITY

- Ironbridge Equity acquired King’s Pastry, a Mississauga, Canada-based bakery products manufacturer. Financial terms were not disclosed. 

- Scanmed, backed by Abris Capital Partners, agreed to acquire Ars Medical, a Pila, Poland-based cancer care treatment company. Financial terms were not disclosed.

SPAC

- Cycurion, a McLean, Va.-based cybersecurity solutions provider, agreed to go public via a merger with Western Ventures Acquisition Corporation, a SPAC. A deal is valued at $170.44 million.

PEOPLE

- Kanbrick, a Chicago-based investment firm, hired Sloan Allen as vice president of Kanbrick Community. Formerly, she was with Bank of America. 

- Vista Credit Partners, the New York-based credit investing arm of Vista Equity Partners, hired Greg Galligan as senior managing director. Formerly, he was with Ares Management Corporation.